200326 Dead Cat Bounce

The last few days have triggered a significant upside rally that in some years would actually be considered a great annual return (+13%). Do not get suckered into it unless you are buying stocks you are willing to hold long term. The initial drop of over 25% in just a few weeks time is indicating that another drop up to that amount may occur in the ST future. The market has rallied on the news that the US is willing to run the national credit card to max levels. That isn’t something to rally on. It’s modern monetary theory.

Short term, it may offer some relief. Don’t think for a second that this is the last of the ballout bills. Its just the first big one of several. The party will end next week when the news that COVID and the economy remain on grim a trajectory.

Last fall I wrote that the trajectory of the failure of the US dollar had at least 10 years to unfold. That was based on the math of $1T USD in deficit spending per year for 10 years. $10T total. The US Government now appears (with published FED monitization of debt) to be on track to print $7 trillion out of thin air this year. The clear investment winners will emerge later this summer- Gold, Silver and Bitcoin.

Want a great read on what happens when a currency collapses and how it can impact you and your families health, welfare and safety? I recommend this https://www.amazon.com/gp/product/9870563457/ref=ppx_yo_dt_b_asin_image_o00_s00?ie=UTF8&psc=1

Do NOT judge this book by its cover! I was very surprised and impressed with the content. Well worth the time and money. Many might find it invaluable. This site isn’t linked to Amazon Marketplace. I’m not making a penny on the advice it holds.

Sneak Peak: I’ve bought some silver and gold coins over the years. It seemed prudent. What this author describes when he was faced with hyper inflation was that a 18K gold chain was better. When he needed to buy something, he would sell gold links. Owners of gold coins quickly became targeted as “rich” by the desperate. Besides, gold chain is cheaper than trying to buy a coin. Win- win. I had never heard that before I read this book. Probably I wasn’t paying enough attention.

200324 This isn’t over!

I got some Permi- Bull friends that keep calling a bottom and keep trying to catch this falling knife. I know and understand the temptation. Fell for it in 2000 to my regret. My notes to them:

But anything will be short lived. The Fed announcement today that they are buying bond ETFs lead to a rally.

Until people had some coffee  and said “I didn’t know the bond market was that f-ed the Fed has to get involved!” We are, as Koreans say, in deep kimchi. The credit market is failing and its massive compared to the stock market.

I think we are into this correction about where we were in Oct 2008. People seem to believe a bailout will create a V shaped rally. V’s happen in bull markets. Not in  Bears.  Bear markets last 4-9 months. This is month #1.

Last 12 years has been marked by a lot of V’s (Chart below) A decent Bull Market trains people into almost robot like programming “to buy the dip”. The last Bull we had was one for the ages! ITS OVER!

After all the destruction in recent weeks, seemingly people cannot wrap their noggins around that truth. The situation is fundamentally changed since last month. The Fed cannot save this. Neither can Congress nor Trump. Collectively we are in a rough patch and it’s portfolio  suicide to do what TV pundits suggest… “Buy the Dip!” They are paid to say that! Yes, from my perspective its OK for ME to buy a bit on AMZN, NFLX, ZM, RNG. Nibble only! Its not the apocalypse. But its not the end of the Bear, either!

The uptrend that happen in Bear Markets are called either Dead Cat bounces or Bull Traps. They often last 4-7 days. Sometimes longer. Suddenly, people are more afraid of missing out on the rally then they are of follow on losses.

Inevitably, a final fall happens that crushes their hopes and dreams. I suspect we won’t see a final bottom until after they remove the 10% penalty for early withdrawal from retirement funds.  The unemployed will demand that.  The day after that happens, hundreds of billions will head for the exit and never return. Terrified Boomers will bolt too. Then the market will make its final move down. 

That said- I’m nibbling a bit on some Amazon, NFLX, and Ring (RNG). Crime will rise. Ring is a good deterrent . Also the Gold Bugs are starting to make noise. They drove prices higher off the “Dollar is dead” argument.  They were right in 2009. They are more right now.

200319 Position Update

PositionTargetCurrent Stop LossComment
Cash$1.00$1.00NAAll retirement plan accounts
TECS- 3x short Tech   3/19 Sold. Tech is stabilizing.
EDZ- 3x Short Emerging Markets$90.00$50.74$35.90Emerging markets are in more jeopardy than US is at this point. 3/19 added to position
SQQQ- Ultrashort QQQ$45.00$25.20$17.903/19- holding
FNGD- Inverse Fang$15.00$8.90$7.50Sold 3/18 for profit. Expect AMZN and NFLX to diverge and move higher
YANG- 3x short China$95.00$50.64$38.90Sold 3/18 for profit
Carnival Cruise Line Put $8.00$6.40$3.50SOLD 3/13  Percentage wise, its run itself down to diminishing return. Redeploying cash during todays Bull Trap
Carnival Cruise Line Put $20.00$11.50$6.50SOLD 3/13 Percentage wise, its run itself down to diminishing return. Redeploying cash during todays Bull Trap
SW Air Put$24.00$8.50$6.24SOLD 3/13: US Govt says its preparing to intervene financially
Disney Puts$28.00$14.10$10.50Sold 3/18 for profit
Microsoft Puts   Sold 3/19 for 22% profit. 
Visa Puts   Sold 3/19 for 87% profit
Cracker Barrel Puts$24.00$15.40$12.00Jun 19 $90  Bought 3/13 Fast casual food on primary travel routes.  This rallied on 3/19 and missed chance to buy more. Cracker Barrel is in trouble. Looking to add to position
Apple Puts$22.00$12.85$11.25Sold 3/18 for profit

200319 Buy Netflix (NFLX)

Will spare you the chart. Fundamentally, the EU is asking Netflix to slow its streaming lest it drop the entire internet architecture to its knees. NFLX has to be scoring huge customer adds in many countries.

200317 Position update

Based on a belief there is at least another -20% downside, holding EDZ, SQQQ and TECS. On days where market is up +5% or more, buying short term (14-21 day) calls on SQQQ and TECS to escalate gains. No longer trading from TECS to TECL on a hard down day to catch the next days rally attempt- at this point, the bulls have got to be getting tired of getting caught in a bull trap. At this point they are 4 times burned in 10 trading days. Have reduced Puts on Disney and others once they hit 75-100% up so those positions are now house money.

Sold YANG and FNGD. The inverse FAANG ETF has got to diverge at some point- there is a bullish case for NFLX and AMZN. Apple is the one in the FAANG most susceptible to out sized draw-down.

200315 Mondays action:

If market moves down more than 5% on 3/16, will sell YANG and reduce shorts. While there is still $$ to be made in YANG, on a global basis it’s the US stock market that is the most highly over-valued and has the most room to fall if / when draconian measures are put into place to try to get a handle on COVID-19.

Goal will be to get long TQQQ and TECL in anticipation of a sharp move higher ( probably due to Congressional action) on Tuesday.

200313 Relief Rally!!!!!

Relief rally? That is a suckers bet. A Bull Trap. Stay in cash or stable coin OR be dumb enough to follow my cynic trades. Markets today rallied on the news that President Trump finally declared a National Emergency. The lines at Costco two weeks ago would have told any dummy that something nation wide was amiss! Any American could have told you last week we have hit a crisis.

The US Government is actually going to get serious, but its far too late to stop this from pushing the US into recession. When China closed Wuhan, it gave the world weeks of time to react. To plan. To prepare. The US wasted the advantage it was given.

Federal inaction has allowed this to spread and its impact on the economy will be harsh. For all the people that will die, ten times more will lose their jobs, their houses. Student loans, car loans and personal loans will go into default. The entire debt ridden system is under threat. Bailouts are coming next. Bailouts of under performing debt @ the expense of the US taxpayer for out of control corporate debt.

Don’t buy into today’s Bull Trap where people who perpetually believe that ‘everything is awesome’ lose their money to those that are more grounded. I believe COVID-19 is the Bull Killer & we are at risk of losing another 15-25% of market capitalization. Below in a previous post are my holdings. Lost a lot on paper today. Not worried. This Bubble has found its Pin.

200313 Position changes

PositionTargetCurrent Stop LossComment
Cash$1.00$1.00NAAll retirement plan accounts
TECS- 3x short Tech$12.00$7.82$6.50Today I’ve adjusted SL higher than purchase price.
EDZ- 3x Short Emerging Markets$90.00$50.74$35.90Emerging markets are in more jeopardy than US is at this point
SQQQ- Ultrashort QQQ$45.00$25.20$17.90 
FNGD- Inverse Fang$15.00$8.90$7.50Play on the overvaluation of Facebook, Amazon, Google & Netflix
YANG- 3x short China$95.00$50.64$38.90China may have COVID contained- but economic shock may just be getting felt
Carnival Cruise Line Put $8.00$6.40$3.50SOLD 3/13  Percentage wise, its run itself down to diminishing return. Redeploying cash during todays Bull Trap
Carnival Cruise Line Put $20.00$11.50$6.50SOLD 3/13 Percentage wise, its run itself down to diminishing return. Redeploying cash during todays Bull Trap
SW Air Put$24.00$8.50$6.24SOLD 3/13: US Govt says its preparing to intervene financially
Disney Puts$28.00$14.10$10.50Oct 16 $105 put. Holding. Earnings losses in movie theaters is next to impact this
Microsoft Puts$11.25$19.00$9.50May 15@$140 Bought 3/13 Held up pretty well. Capitulation doesn’t happen until firms like MSFT get crushed.
Visa Puts$21.80$15.25$11.80May 15 @$160 Bought 3/13 Play on slowing economy- defaults will rise
Cracker Barrel Puts$24.00$15.40$12.00Jun 19 $90  Bought 3/13 Fast casual food on primary travel routes. 
Apple Puts$22.00$12.85$11.25May 15 @$250. AAPL may be reopening in China, but US market in jeopardy as new purchases placed on hold due to uncertainty. 

200311 Newsletter holdings

This is a birthday present, of sorts! These are subject to change in the event the market turns markedly bullish. On Monday, with the market down a notable 7%, some didnt realize that a +3% bounce the next day was almost a certainty. Bull markets die quickly, but not easily. Expect more downside moves with rally attempts along the way by the perma- bulls. Drunks are the last one to accept the party is over. Once they do realize its over, expect a significant culmination draw down.

PositionTargetCurrent Stop LossComment
Cash$1.00$1.00NAAll retirement plan accounts
TECS- 3x short Tech$12.00$7.82$6.50Today I’ve adjusted SL higher than purchase price.
EDZ- 3x Short Emerging Markets$90.00$50.74$35.90Emerging markets are in more jeopardy than US is at this point
SQQQ- Ultrashort QQQ$45.00$25.20$17.90 
FNGD- Inverse Fang$15.00$8.90$7.50Play on the overvaluation of Facebook, Amazon, Google & Netflix
YANG- 3x short China$95.00$50.64$38.90China may have COVID contained- but economic shock may just be getting felt
Carnival Cruise Line Put $8.00$6.40$3.50April 3 $26 puts. If hits $8, will move to a Jun/Jul timeframe in money put
Carnival Cruise Line Put $20.00$11.50$6.50Jan 15 2021 $27.5 put. Holding until bleeding stops in travel
SW Air Put$24.00$8.50$6.24Jan 15 2021 $42.50 puts. Holding.
Disney Puts$28.00$14.10$10.50Oct 16 $105 put. Holding

200310 Crypto Chart hold

Cryptocurrencies are behaving like equities & reasonable conclusions as to price direction has been impossible for me to determine with any accuracy for the past few weeks. For now, just HODLing my core and rest is in stable coin.

200301 Rethinking Equity position (Fearing Fear Post)

After doing a lot of charting over the past day, the possibility of a short term counter downtrend rally has become more likely. Things don’t fall straight down without even mild attempts of a rally and this fall off has been spectacular. Assuming the financial services folks have spend far more of their weekend trying to engineer a stabilization strategy for the market, it makes sense to expect one- however short or long lived.

The riskiest way to play a bounce is with Leveraged ETFs (3x). UPRO and TECL are candidates I’m considering. If markets in the US open with a significant bounce higher, I am going to wait until closer to 1200 to get a sense of its strength. If markets resume a downtrend, I am going to closely watch levels at 1030 to await a turn of events.